Commission questions Enstar increase

RCA will investigate start date for hook-up increase; order specified April 21; participation of Attorney General requested

Kristen Nelson

Petroleum News

Enstar Natural Gas Co., which got its connection rate increased by the Regulatory Commission of Alaska in April, has run afoul of the commission on implementation of the increase.

RCA said in a May 5 order that it is initiating an investigation and inviting participation by the Alaska Attorney General into the reasonableness of Enstar’s implementation of the increase in connection fee.

Enstar had been charging $20 for a connection, and the commission said in its April 21 letter order that the old tariff would apply to customers who have filed a complete application and paid the fee prior to the April 21 effective date of the new rate. The commission also required that Enstar allow customers who had paid for temporary service lines to receive permanent service lines without paying the increased fees.

The new fee approved by the commission is $600 for a service line plus $178 for a meter. The commission noted in its April 21 order that over the last three years Enstar’s average cost for installing a service line was $1,178 and its average meter installation cost was $304 for a residential customer, a total of $1,482 which represents only 1.3 percent of the average total cost of a new single-meter service installation, leaving the remaining 98.7 percent to be recovered from all customers through rates in the form of depreciation and return.

“This is not in accordance with the ratemaking doctrine of cost causer/cost payer,” the commission said. “From a public policy standpoint, a lesser degree of subsidization may be desirable.”

The increased connection fee will reduce the level of subsidy paid by current customers from 98.7 percent to 47.3 percent.

In opening an investigation docket May 5 the commission said Enstar had notified customers of the increase in connection charge and was required to notify the same customers of the commission’s action.

RCA investigating Enstar’s action

The commission said it had two concerns about the Enstar letter, since RCA regulations require: “If more than one tariff rate or charge can reasonably be applied for billing purposes the one most advantageous to the customer shall be used.” And its April 21 letter order said the new rates would take effect on that date and not apply to customers who had already completed an application and paid the fee.

RCA also said that it appears Enstar previously required fees when applications were filed and the April 24 letter “conflicts with what appears to be customary practice, if it refused to accept complete applications filed before April 21st or refused to accept tender of the $20 fee made with applications filed in that same time period.”

Petitions to intervene are due May 19.

RCA said because there are no parties specifically representing the public interest, it has asked the Alaska Attorney General to participate as a party in the docket.

T.W. Patch has been appointed hearing examiner for the investigation into the reasonableness of Enstar’s implementation. RCA said Enstar has until May 10 to mail a copy of the order to all customers to whom it sent its April 24 letter.

Persons who attempted to apply for service or pay the $20 fee before April 21 and were told by Enstar that it could or would not accept the application or fee may file an affidavit explaining the circumstances.